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Chapters:

3.9 Allowable Costs

Compensation for Personal Services

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Limit on Use of Grant Funds for Salaries of Grantees’ Employees
Support of Salaries, Wages, and Fringe Benefits
Added Work
Overtime Compensation

Limit on Use of Grant Funds for Salaries of Grantees’ Employees

You may not use Federal grant funds to pay cash compensation (salary plus bonuses) to any employee at a rate that exceeds 110 percent of the annual salary payable to someone at the Federal Government’s Senior Executive Service (SES) level.

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Any additional compensation beyond 110 percent of the U.S. Government SES level will not be considered matching funds where matching requirements apply.

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Support of Salaries, Wages, and Fringe Benefits

Charges made to Federal awards for salaries, wages, and fringe benefits will be based on payroll records approved by a responsible official(s) and in accordance with the generally accepted practice of the organization.

  • Where recipient employees are expected to work solely on a single Federal award, charges for their salaries must be supported by periodic certifications.
  • These certifications must be prepared at least every 6 months and signed by the employee and supervisory official having firsthand knowledge of the employee’s work.
  • Where grant recipients work on multiple grant programs or cost activities, a reasonable allocation of costs to each activity must be made based on time and/or effort reports (e.g., timesheets). These reports must:
  • Reflect an after-the-fact distribution of the actual activity of each employee;
  • Account for the total activity for which each employee is compensated;
  • Be prepared monthly and coincide with one or more pay periods; and
  • Be signed by the employee and approved by a supervisory official having firsthand knowledge of the work performed.
  • In cases where two or more grants constitute one identified activity or program, salary charges to one grant may be allowable after written permission is obtained from the awarding agency.

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The awarding agency must approve all salary supplements, including severance provisions and other benefits with non-Federal funds. Refer to the appropriate cost principle section of the CFR referenced previously for further details.

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Added Work

As a recipient or subrecipient, you may employ a State or local government worker to complete tasks in addition to his or her full-time job, provided the work is performed on the employee’s own time and:

  • You pay him or her compensation that is reasonable and consistent with that paid for similar work in other activities of State or local government;
  • The employment arrangement is approved and proper under State or local regulations (e.g., no conflict of interest); and
  • The time and/or services provided are supported by adequate documentation.

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Overtime Compensation

You should compensate recipient and subrecipient employees with overtime payments for work performed in excess of the established work week (usually 40 hours).

  • Payment of more than occasional overtime is subject to periodic review by the awarding agency.
  • In addition, overtime compensation is typically reviewed during site visits and audits.

Executives, such as the president or executive director of an organization, may not be reimbursed for overtime or compensatory time under grants and cooperative agreements.

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In no case is dual compensation allowable. That is, an employee of a unit of Federal, State, or local government may not receive compensation from his/her unit or agency of government AND from an award for a single period of time (e.g., 1 to 5 p.m.), even though such work may benefit both activities.

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